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"Near term inflation risk is skewed to the upside, but the medium - to long- term inflation outlook remains relatively benign. Admittedly, the consumer price index is likely to breach the upper end of the inflation target temporarily in the third quarter, partly reflecting a stronger advance in food price inflation. But, core inflation has been relatively well behaved and is expected to remain within the inflation target range in the medium term. Moreover, food price increases late last year create a base from which food price inflation should, following a peak in the third quarter, slow materially in the last quarter of 2013 (barring renewed food price increases at producer level)."

"Overall, looking ahead the Bank is likely to remain on hold through 2013 in a global environment where developed market central banks seem set on maintaining low interest rates for an extended period, domestic real GDP growth is likely to be moderate only and medium- to long-term inflation forecasts remain within the Bank's inflation target range. One key risk to the benign inflation forecast outlook is the currency. South Africa is a small, open economy and further, sustained Rand weakness from current levels would likely be inflationary."

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